Calls for u-turn on harbour complex

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The government is under pressure to do a U-turn and increase commercial space along the new Central waterfront.

Consortiums seeking to develop the waterfront say the limited commercial space, and conditions attached to the project, make it financially unviable.

The government and the Harbourfront Commission recently began negotiating with potential bidders to develop the waterfront.

People familiar with the situation said that, because of the concerns these consortiums have raised, the Development Bureau is considering ways to make the project more attractive.

The options include injecting public money, increasing the amount of commercial space and extending the period of waterfront land leases to give the winning bidders more time to recover their costs and make a profit.

The waterfront project comprises two sites. The successful bidders will be asked to design, build and operate facilities there.

They will not be charged a land premium - the sum developers of a site usually pay, representing the difference between its present and developed value - but after an agreed number of years will have to pay a share of revenue to the government.

The bureau also wants developers bidding for the sites to include non-governmental organisations and social enterprises in their consortiums.

With negotiations at an early stage, none of the consortiums has spelled out specific objections to the government's plans.

However, developers that expressed interest in bidding during a marketing exercise by the bureau in May said they would not be financially viable.

They also questioned the uneven distribution of restaurants and shops between the two sites.

While up to 7,500 square metres of a 9,300 square metre site north of City Hall in Central can comprise shops and restaurants, only 480 square metres of a much bigger, 9.9 hectare site stretching from the Star Ferry pier to the Convention and Exhibition Centre in Wan Chai is set aside for restaurants and fast food shops.

No space in either area should be given over to global brands, the bureau says.

The developers' claims were echoed by Raymond So Wai-man, a finance professor at Hang Seng Management College, who said the government's conditions were too restrictive to attract private sector partnerships.

'Incentives like paying for the infrastructure or delaying profit-sharing are necessary,' So said.

However, he said the public might not support such arrangements, and there could be a 'political risk' if the government gave the impression it was doing favours for developers.

The new waterfront has been dogged by controversy since plans were first unveiled in 2005.

When the government announced the reclamation of land from the harbour for a Central-Wan Chai bypass, it said the harbourfront would be a world-class amenity.

But its initial proposal - to use much of the waterfront sites for big commercial developments, dubbed groundscrapers - sparked an outcry.

It initially defended the plans, with the then permanent secretary for lands, Rita Lau Ng Wai-lan famously saying: 'People don't go to the waterfront if they have nothing to do there.' But it issued a revised proposal in 2008, in which the amount of commercial floor space was reduced by nearly a fifth, to 260,000 square metres.

Bernard Lim Wan-fung, president of the Hong Kong Institute of Urban Design, fears that increasing the commercial scale of the projects now would diminish the chances of smaller bidders winning the tenders.

'The project should be run by operators from a diverse background, not just a giant developer dominating the waterfront with brand-name products,' he said.

Lim added that the government could always settle for a smaller share of the profits.

'A vibrant waterfront does not necessarily require huge investment,' he said. 'A bamboo pavilion selling snacks can be very attractive if the design is creative.'

A spokeswoman for the Development Bureau said the government had received seven submissions from different organisations.

It had commissioned a consultant to examine the project's feasibility and come up with options.

480

The number of square metres allocated for restaurants and fast food shops in the site from the Star Ferry pier to Wan Chai